Apple stock sentiment 'could not be much worse' - analysts

Due to mounting challenges on several fronts, Apple (NASDAQ:AAPL) stock has fallen more than 12% since the start of 2024. Currently trading near their lowest point in 5 months, some Wall Street analysts suggest it may be a while before the iPhone maker’s shares return to winning ways.

Apple Car canceled, soft iPhone sales in China

There are several key developments that contributed to lackluster investor sentiment toward Apple stock this year, and in turn, its negative year-to-date performance.

In late February, reports revealed that the tech giant has decided to halt its electric car project. The decision came ten years after Apple initially launched this project, putting an end to its aspirations of entering and potentially dominating a new market segment, similar to the impact of the iPhone.

Throughout its development, the electric vehicle (EV) project experienced inconsistent progress and is being discontinued amid a broader slowdown in EV investments by global automakers, prompted by declining demand.

Bloomberg News, the first to report on this move, stated that several team members involved in the electric car initiative would be reassigned to work within Apple's artificial intelligence (AI) department.

But perhaps the single biggest factor that has been adversely affecting investors’ interest in Apple stock is the waning iPhone sales, both globally and in China. Especially in China.

Last month, research firm Counterpoint Research reported that in the first six weeks of 2024, Apple witnessed a 24% decline in iPhone sales in China.

The company’s market share in the Chinese smartphone sector fell to 15.7%, positioning the company in fourth place, a significant drop from the second place it held the previous year with a 19% market share.

In contrast, Huawei, Apple's primary rival in China's premium smartphone market, experienced a remarkable 64% increase in unit sales during the same timeframe.

Furthermore, more recent data from China showed that Apple shipped approximately 2.4 million smartphones in China during February, representing a 33% decrease compared to February 2023.
These numbers further fueled fears of a slowdown in demand for the world’s second-largest company, whose revenue forecast for the current quarter was $6 billion below consensus estimates.

Apple stock sentiment ‘could not be much worse’

Apple faces demand challenges that are not likely to go away easily. The company has been one of the few laggards among mega-cap tech stocks, the majority of which continues to thrive on the ongoing expansion in the AI world.

As a result, many have been using Apple stock as a source of funds to invest in AI frontrunners such as Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Meta Platforms (NASDAQ:META), among others.

After having discussions with investors on the road, a Mizuho Securities trading desk analyst noted that the sentiment surrounding AAPL “could not be much worse.”

“I hear folks suggesting a big guide below coming for June, and any new AI offering are 2H25 at best. It feels really bad to me,” the analyst said.

Earlier this week, Loop Capital analysts reduced their 12-month price target for Apple stock to $170 from $185, citing waning demand, increasing competition, and stagnant iPhone Average Selling Prices (ASPs).

The move came alongside a downward revision in their revenue and earnings forecasts for Apple in 2024.

“In this context notably we now project AAPL overall revenue and EPS to decline YoY in CY2024 for the first time since 2016,” Loop Capital’s analysts said.